>
>From: "Ira
Meislik" <imeislik@meislik.com>
>
>Professor Pat:
>
>The following
case summary has the same kind of "smell":
>
>Mortgage Electronic
Registration Systems, Inc. v. Wilson
>2005
WL 1284047 (N.J. Super. Ch. Div. 2005) (Unpublished)
>October 31, 2005
>MORTGAGES;
EQUITABLE MORTGAGES - Even though a note is executed by only one
>joint property owner, where the joint owners used the
property to secure the
>money lent by a
mortgagee, and the money is directly used to purchase the
>property, both owners should be held responsible for
the debt because both
>benefited from the
loan.
>
>A woman executed a note and mortgage and then defaulted under the
terms of
>the note. The mortgagee
filed to foreclose. It then discovered that, at
>the loan closing, the property had been deeded to the borrower and
the
>borrower's husband. It then
served the borrower's husband with a summons
>and complaint and received no responsive pleading. It argued
that because
>the husband "ha[d] enjoyed the
same use of the funds as [the borrower] ...
>[he] gained a benefit from the use and enjoyment of the mortgage
proceeds."
>It pointed out that had it, the
mortgagee, not advanced the funds, the
>husband and wife would not have acquired title to the property.
Its logic
>was that the husband "should not
benefit and [the mortgagee] should be
>permitted to enter judgment based upon the theory that an equitable
mortgage
>ha[d] been created." It pointed
out that its intent was to grant the
>purchase money mortgage and that although the husband "did not sign
the
>mortgage it should not change the
outcome." The Court reviewed relevant case
>law, and agreed that "the way in which the parties agreed to create
a
>mortgage does not matter. So long
as the parties intended to secure a debt
>by
a certain piece of property, an equitable mortgage will have been
>created. Express words are not required to create
an equitable mortgage so
>long as the
intention to create such a lien is evident." Here, it was clear
>to the Court that the couples' "intent was to use the
property to secure
>money lent by [the
mortgagee]." The money was directly used to purchase the
>property. To the Court, it was clear that both
the husband and wife "should
>be held
responsible for this debt as both benefited." Consequently, it found
>that "an equitable mortgage was created" and entered
judgment against the
>husband.
>
>Ira
Meislik
>Meislik & Meislik
>66 Park Street
>Montclair NJ 07042
>ph - (973)
783-3000 X103
>Fax - (973)
744-5757
>
>imeislik@meislik.com
>www.meislik.com
>
>
>
>-----Original
Message-----
>From: DIRT - Real Estate
Lawyers Listserv [mailto:DIRT@LISTSERV.UMKC.EDU] On
>Behalf Of Patrick Randolph
>Sent:
Monday, August 21, 2006 1:39 PM
>To:
DIRT@LISTSERV.UMKC.EDU
>Subject: [DIRT] DD
8/22/06 Forged Deed, but Good Mortgage
>
>
>I had thought this was posted earlier, but couldn't find it in my
files, so
>I'm using it today. If it
looks familiar, please let me know when I posted
>it.
>
>Daily Development for Tuesday, August 22, 2006
>by: Patrick A. Randolph, Jr.
>Elmer F. Pierson Professor of Law
>UMKC School of Law
>Of Counsel:
Blackwell Sanders Peper Martin
>Kansas City,
Missouri
>dirt@umkc.edu
>
>
>RECORDING ACTS; BONA FIDE PURCHASER; FORGED
DEEDS: Although a mortgage
>given on a title obtained by a forged deed normally will not avail
the
>mortgagee even when it has no knowledge
of the forgery, the mortgagee's
>mortgage
may have some validity where the mortgage was given by a husband
>who forged his wife's signature on a quitclaim deed and
most of the proceeds
>were expended on
community expenses.
>
>Mabra v. Deutsche Bank & Trust Co. Americas, 627
S.E. 2d 849 (Ga. App. 2006)
>
>Husband and wife divided their financial
responsibilities. Husband had
>responsibility for paying the mortgage on their home, and wife paid
him $500
>toward the expense. At some
point, Husband falsely informed Wife that the
>mortgage was paid. Later Husband proceeded to borrow under
several
>successive mortgages in his own
name. He forged his wife's signature on a
>quitclaim deed, which he recorded, to support these mortgages.
In the end,
>the sum exceeded $224,000,
which husband refinanced in one mortgage that he
>alone executed.
>
>Later, husband brought to wife papers for an additional
loan for her to
>sign, which she did, never
knowing about the forged deed or the prior
>mortgages.
>
>When husband died, wife continued to live in the house
and ultimately
>discovered the
mortgage. Wife brought suit to cancel the mortgage and to
>enjoin the mortgagee from foreclosing. The trial
court granted summary
>judgment to
mortgagee, and the court here, in an exceedingly poorly drafted
>opinion, affirmed.
>
>The court began by chastising
the wife's counsel for failure to follow the
>appellate briefing forms. This makes ironic the failure of the
court to
>supply us with much understanding
of this somewhat remarkable outcome.
>
>The court acknowledged that the
normal rule is that a title based upon
>forged documents is void, and that those taking interests under such
void
>title have no interest, and cannot
succeed even through a claim of bona fide
>purchaser status. Nevertheless, the court concludes, in this
case an
>exception should be made.
Here is the sum total of the court's analysis:
>
>"In her petition, Mrs. Mabra
seeks the equitable relief of enjoining
>[mortgagee] form foreclosing on the property and the cancellation of
the
>allegedly forged quitclaim deed.
In other words, she would like to continue
>to live -cost free- in a house that neither she nor her husband has
ever
>actually owned outright.
Although Mr. Mabra told his wife that he paid off
>the mortgage, such was untrue. And while it is unfortunate that
Mr. Mabra
>essentially defrauded his wife,
'it is much more equitable that she should
>lose her land than that the innocent creditor should lose his
security.'
>This is particularly true where,
as here, the land was always encumbered by
>a mortgage. Again, Mrs. Mabra seeks equitable relief, and
'[e]quity seeks
>always to do complete
justice.' Although Mrs. Mabra may be entitled to some
>form of relief, we fail to see the justice in the
remedy she seeks. And as
>we find that
Mrs. Mabra was not entitled to the relief sought, the trial
>court did not err in granti ng [mortgagee's] motion for
summary judgment."
>
>Comment 1: What a terrible opinion!!! The appeals
court was irritated with
>appellant's
counsel, but why take this out on the rest of us, who now must
>deal with the precedential impact of a case apparently
giving relief to a
>party relying upon a
forged title?
>
>Comment 2: As examples of the many ambiguities in the
opinion, we aren't
>told whether the
mortgagee's loan represented in part a refinancing of the
>original loan to which the wife had agreed, or whether
that had ever been
>ultimately paid or what
happened to the other loan to which she did agree.
>Further, although earlier in the opinion the mortgagee argued that
the
>proceeds of the loan had been used to
"satisfy debts of the Mabras," we
>aren't
really sure what this means, or whether any court found this
>allegation to be true. Although the court says
that Mrs. Mabra never owned
>title outright,
it doesn't bother to tell us the nature of the title that
>she held with her husband. Was it a survivorship
estate?
>
>Comment 3: There is indeed some authority for the proposition that
a
>spouse's interest in marital property may
be liable for debts incurred by
>the other
spouse for purposes benefitting the marital community, this is a
>narrow exception to a very well established rule that
normally a spouse
>cannot encumber the other
spouse's property interest in marital property.
>What happened here?
>Comment 4: Note that the mortgagee had not yet attempted to
foreclose.
>Perhaps, if Mrs. Mabra gets
counsel more palatable to a court, she'll be
>able to limit the scope of any foreclosure. But foreclosure in
Georgia
>typically is a private foreclosure,
so she'll have to be in court once again
>seeking equitable relief.
>
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